GBP/USD – Bullish Falling Wedge Breakout Setup | 1H Technical Breakdown
Pair: GBP/USD (British Pound / U.S. Dollar)
Timeframe: 1H (Hourly)
Published: May 4, 2025
Platform: OANDA
Technical Pattern: Falling Wedge (Bullish Reversal)
🔍 Chart Pattern Breakdown: Falling Wedge
The primary structure visible on the chart is a Falling Wedge, a classic bullish reversal pattern. This pattern occurs when price consolidates between two downward-sloping trendlines that converge. The pattern reflects diminishing bearish momentum, often leading to a strong upside breakout once buyers regain control.
Key Characteristics:
Sloping Resistance Line: Connects the lower highs.
Sloping Support Line: Connects the lower lows but converges with resistance.
Volume Typically Declines during wedge formation, suggesting fading selling pressure.
Breakout Direction: Bullish (to the upside) once resistance is broken.
🧭 Technical Structure and Price Behavior
1. Falling Wedge Formation
The wedge began forming after a strong uptrend.
Lower highs and lower lows developed within the wedge boundaries.
Price has now reached the apex, a common point where breakouts occur.
2. Support Zone (~1.3245–1.3260):
Price has tested this zone multiple times, forming a base.
This horizontal zone also aligns with the lower wedge trendline.
Repeated bounces here indicate accumulation and buyer interest.
3. Resistance Zone (~1.3300–1.3320):
Minor horizontal resistance aligns with the wedge’s descending upper boundary.
A confirmed candle close above this zone would indicate a breakout and trigger a long entry.
🎯 Trade Setup and Strategy
This chart presents a well-defined long trading setup based on a potential breakout from the falling wedge.
Trade Element Level / Description
Entry Point On confirmed breakout above 1.3300–1.3320
Take Profit 1 1.33342 – First key resistance
Take Profit 2 1.33880 – Previous high and full wedge target
Stop Loss 1.31806 – Below wedge and horizontal support
💡 Trade Rationale
Bullish Reversal Potential: The wedge signals exhaustion in the prior downtrend.
Multiple Support Bounces: Validates the 1.3250 zone as a strong buy area.
Positive Risk-to-Reward Ratio: Clear SL and layered TP structure offer good RR (2:1+).
Structure-Based Trading: Combines pattern breakout with horizontal zones.
🧠 Price Action Insights
The most recent candle has tested wedge support again and shows signs of a rejection wick, hinting at bullish pressure.
If price forms a higher low within support and breaks resistance, it may trigger a strong push toward 1.3334 and possibly 1.3388.
This move would invalidate the prior lower-highs sequence, completing the wedge breakout.
⚠️ Risk Management & Considerations
False Breakout Risk: Wait for a clear 1H candle close above resistance to confirm breakout.
Volatility Factors: Be aware of upcoming U.S. or U.K. economic events (jobs data, interest rate decisions, CPI).
Trailing Stops: Consider adjusting stops to breakeven after TP1 is hit to lock in gains.
✅ Final Summary
GBP/USD is currently showing a textbook Falling Wedge Reversal on the 1H chart. The price is respecting a strong support zone and consolidating within converging trendlines. A breakout above the resistance zone (~1.3300–1.3320) will likely trigger a bullish continuation toward 1.33342 and ultimately 1.33880.
This is a high-probability bullish setup supported by clean technical structure, pattern psychology, and risk management potential.
Pair: GBP/USD (British Pound / U.S. Dollar)
Timeframe: 1H (Hourly)
Published: May 4, 2025
Platform: OANDA
Technical Pattern: Falling Wedge (Bullish Reversal)
🔍 Chart Pattern Breakdown: Falling Wedge
The primary structure visible on the chart is a Falling Wedge, a classic bullish reversal pattern. This pattern occurs when price consolidates between two downward-sloping trendlines that converge. The pattern reflects diminishing bearish momentum, often leading to a strong upside breakout once buyers regain control.
Key Characteristics:
Sloping Resistance Line: Connects the lower highs.
Sloping Support Line: Connects the lower lows but converges with resistance.
Volume Typically Declines during wedge formation, suggesting fading selling pressure.
Breakout Direction: Bullish (to the upside) once resistance is broken.
🧭 Technical Structure and Price Behavior
1. Falling Wedge Formation
The wedge began forming after a strong uptrend.
Lower highs and lower lows developed within the wedge boundaries.
Price has now reached the apex, a common point where breakouts occur.
2. Support Zone (~1.3245–1.3260):
Price has tested this zone multiple times, forming a base.
This horizontal zone also aligns with the lower wedge trendline.
Repeated bounces here indicate accumulation and buyer interest.
3. Resistance Zone (~1.3300–1.3320):
Minor horizontal resistance aligns with the wedge’s descending upper boundary.
A confirmed candle close above this zone would indicate a breakout and trigger a long entry.
🎯 Trade Setup and Strategy
This chart presents a well-defined long trading setup based on a potential breakout from the falling wedge.
Trade Element Level / Description
Entry Point On confirmed breakout above 1.3300–1.3320
Take Profit 1 1.33342 – First key resistance
Take Profit 2 1.33880 – Previous high and full wedge target
Stop Loss 1.31806 – Below wedge and horizontal support
💡 Trade Rationale
Bullish Reversal Potential: The wedge signals exhaustion in the prior downtrend.
Multiple Support Bounces: Validates the 1.3250 zone as a strong buy area.
Positive Risk-to-Reward Ratio: Clear SL and layered TP structure offer good RR (2:1+).
Structure-Based Trading: Combines pattern breakout with horizontal zones.
🧠 Price Action Insights
The most recent candle has tested wedge support again and shows signs of a rejection wick, hinting at bullish pressure.
If price forms a higher low within support and breaks resistance, it may trigger a strong push toward 1.3334 and possibly 1.3388.
This move would invalidate the prior lower-highs sequence, completing the wedge breakout.
⚠️ Risk Management & Considerations
False Breakout Risk: Wait for a clear 1H candle close above resistance to confirm breakout.
Volatility Factors: Be aware of upcoming U.S. or U.K. economic events (jobs data, interest rate decisions, CPI).
Trailing Stops: Consider adjusting stops to breakeven after TP1 is hit to lock in gains.
✅ Final Summary
GBP/USD is currently showing a textbook Falling Wedge Reversal on the 1H chart. The price is respecting a strong support zone and consolidating within converging trendlines. A breakout above the resistance zone (~1.3300–1.3320) will likely trigger a bullish continuation toward 1.33342 and ultimately 1.33880.
This is a high-probability bullish setup supported by clean technical structure, pattern psychology, and risk management potential.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.